Tuesday, November 27, 2012

Last night, 26th November 2012, the BBC's 'Panorama' programme unveiled a truly shocking exposee, dealing with the way that company formation agents in the UK and in the Channel Islands, Dubai and Mauritius are busily setting up companies, both here and in the offshore sector with the express aim of allowing criminals to get round the money laundering legislation.

The programme used undercover reporters using hidden cameras, and they filmed the meetings and the conversations with the relevant entities.

The reporter first presented himself as a wealthy British resident tax-payer who had £6 million stashed in Switzerland, on which no tax had been paid, and on which he wanted to evade any other tax liabilities. For reasons of agreements between the UK HMRC and the Swiss authorities, he wanted the money moved urgently, into another secret facility.

He made an appointment with a firm of corporate servicing agents in York where he met one of the directors. He told him the story of the money and his wish not to pay any tax on it, so the company director was in no doubt that the putative client wished to engage in a piece of unashamed tax fraud.

He was offered a solution involving what was described as a scenario involving a secretive offshore tax haven, a series of companies and trusts and a Foundation in Belize. He was told that the structure would not enable any trace to be made back to the beneficial owner, and that the formation company were already operating up to 10,000 such similar structures already. He was told that in no HMRC investigations have the investigators been able to get to the money.

Jonathan Fisher QC was shown the structure which he then described as containing a number of serious criminal offences.

The programme went on the identify other corporate providers, in Dubai and later in Mauritius. The stories differed, one case involved a purported intermediary wanting to create a secret banking facility for his clients who were described as wealthy Indians who wanted a safe place to stash their commissions they were being paid for ensuring that relevant contract bidding projects went to the right bidders. For commissions, read 'bribes'. The undercover reported went to some lengths to spell out how these so-called 'commissions' worked, and it was made quite clear that they were clearly corrupt, and bribes.

Again, the help they were offered was immediate, constructive and 'for the right fee' potentially would have been very successful. Again, there was use made of offshore companies of various kinds. One of the jurisdictions fingered heavily was Guernsey, who would be making use of nominee directors to help disguise the beneficial ownership's of the corporate structures.

All in all, it was a very grubby tale of greed and as blatant a piece of criminal law-breaking as you could expect. In one scene, a corporate services provider proposed that he would invite a local bank officer to come to a meeting in his offices to meet the purported launderer, and complete the banking formalities. Easier than going to the bank, was how he put it.

What made it all so acutely depressing was that there was no evidence that HMRC had ever prosecuted any of the corporate services providers under their supervision, for any breaches of the Money laundering Regulations, or indeed for straight-forward money laundering itself.

This programme demonstrates the degree of contempt for the Money Laundering Rules and Regulations which exists in the corporate financing sector. The degree of blatant criminal complicity which is going on between potentially shady characters with weird stories, and dodgy cv's. (That's if anyone bothers to check)!

The real problem in all of this is that the Money Laundering Regulations have never been properly policed, and never effectively enforced. That is where the answer to money laundering interdiction lies, in the enforcement of the Regs, but why will no-one, absolutely fucking no-one, step up and take the lead on this?

I have written many times about the lack of willingness on the part of the FSA to take the lead. Their own enforcement arrangements are lack-luster and lukewarm at the best of times. They have consistently refused to accept their Parliamentary responsibilities to enforce the Money Laundering law within the financial sector. HMRC cover another sector, and other agencies have input, but absolutely nothing gets done, and eventually the industry realises that there is no point bothering with a compliance regime because no-one enforces it.

If company directors were getting criminal records for failing to comply with the Regs, there would have been a Gadarene-like rush to provide compliance systems and controls. It is so simple, but apparently so difficult.

I have been forced to come to the conclusion that Government does not really want the AML laws to be enforced - they cannot do so, because they spend such little time and effort insisting on enforcement. I am beginning to believe that they would rather turn a blind eye to the problem, coming up with weasel-worded statements when things get a bit warm about 'ensuring financial institutions have adequate systems and controls', but in practice, just keeping their noses out of the issue, for fear that too much regulation and compliance with international laws might mean putting off some of the slew of dirty money that is constantly flowing around the world looking for a safe haven, from coming to the UK.

I think that there may be a view that if we can't collect the bastard's taxes, then we might as well fill our coffers with the profits from the drug trade and other people's tax evasion, and as long as we pay lip-service to the FATF guidelines, and make sure that we don't get put on some nasty blacklist (which we won't because we make sure we are well-represented at FATF meetings), and as long as we keep pointing the finger of non-compliance at Iran or Pakistan or wherever, we will get away with it!

And all the while we play these silly games, we will have people like those named and shamed in the Panorama programme willing to take the risks to facilitate our ambitions..

What a reputation to have, but then, who really cares? It's only the rich and the big corporates who are fiddling while the financial infrastructure burns! And all the time the rich and the powerful are getting away with not paying their taxes, and pushing their bribes into offshore centres, and setting up their tax-avoision models, who is really losing?

You see, the rich don't use NHS hospitals, God, no! They use exclusive private health care facilities. They don't use public transport, when they have chauffers and big cars; they don't really come into contact with the police, they use private security instead; they send their offspring to private schools, so they don't bother the state education system, and they holiday away from the UK in the sun, so they don't really impact the state infrastructure at all.

As this gap between the haves and the have-nots grows, the rich will be less and less willing to part with their cash, and the kind of services that they are using to move their money around, away from the Chancellor's grasp, will become more and more important to them.

Chiseled over the portico of the IRS building in Washington are the words; 'Taxes are what we pay to live in a free society'! It is a fine statement and it has just as much resonance here in the UK as in the US, but as long as the government is going to be willing to continue to turn a blind eye to the lack of enforcement and what is really going on in the money laundering arena, it's validity is becoming increasingly debased.

When Leona Helmsley once said 'Only the little people pay taxes', I wonder if she really knew how accurate that statement was!

What gave the BBC Panorama programme such verisimilitude were the words uttered by a former detective who had long experience in the money laundering interdiction mechanism, when he said to the reporter, 'I can't believe how easy it was for you to find these people to provide these services.'That is the sad truth, it was all too easy!

Sunday, November 25, 2012

I
have been getting some pretty vociferous criticism from certain city apologists
in recent weeks, all of whom seem to think that my observations about the
financial sector and the FSA are gratuitous and without merit.

As
I have said many times before, I don't mind in the least if other people want
to criticise me, it is after all the nature of a free society that we have the
opportunity to speak our minds and express our honestly-held opinions. It is
always a bit irksome however, when I am made to feel that mine is the only
voice making these remarks, and that my views are considered as uninformed.

One
of my biggest criticisms of the FSA is that they are too focused on process and
procedure. They fail to think laterally, they don't work 'out of the box', and
that they have a cavalier disregard for the interests of the investing public,
preferring to engage in labyrinthine civil service-style exercises of paper
shuffling and thematic reviews, rather than get their sleeves rolled up and
stuck in to those banksters and financial criminal who are making a fortune
from their wrong-doing in the City.

This
is what pisses me off about them so much, because they have not learned the
lessons of history. They think that by staffing themselves with former civil
servants and Bank of England careerists, all of them suffering from the 'Good
Chaps' syndrome to the core, that they think they can somehow regulate a market
full of some of the most evil crooks and wide boys under the sun!

In
this, they are absolutely no different from their former predecessors in the
Department of Trade and Industry who had precisely the same attitude, and who
spent their time arguing about legal minutiae, while the company they were
supposed to be regulating collapsed in a welter of debts.

They were criticised by the Parliamentary
Ombudsman in the David Langford Case back in the 1980's. This was a case of an
investment institution which was supposed to be regulated by a Government
Agency which collapsed, despite the fact that the Agency knew all about its problems and the
failings of its directors.

When
the Ombudsman reported his findings he criticised the DTI severely. He found their conduct 'surprising', other actions were described as
'extraordinary', he criticised the whole Department for 'their poor performance
here and for their apparent lack of regard for the protection of the public
interest'. He found other failings which he believed 'merited criticism', and
he considered their overall handling of matters to be 'ineffective and
ill-judged'. His most telling phrase was saved for the end when he opined that
'...the Department showed a lamentable lack of concern for the interests of
those members of the public who had a right to assume that the DTI's licensing
system offered them a reasonable measure of protection for their investments...'

So
you can imagine how I responded when I read an article in the Saturday Telegraph
which bore as its strap-line, the title of this blog!

Lord Turnbull, a former head of the Treasury
and the Civil Service was questioning two former
FSA Directors, Clive Briault, the former managing director of
retail markets at the FSA, and David Strachan, the former director of major
retail group, as part of his role as a member of the parliamentary commission
on banking standards.

Lord
Turnbull put it straight to these former FSA apparatchiks. He accused the
Financial Services Authority with an obsession with
process which meant it failed to ask basic questions and spot the problems that
built up at HBOS in the years before its collapse, according to Lord Turnbull.

Regulators failed to “smell a rat” in the years
before the collapse of HBOS because they were too focused on process and did
not ask “simple questions”, it has been claimed.

Lord Turnbull, a former head of the Treasury
and the Civil Service, told two former senior officials of the Financial
Services Authority that the regulator’s excuses for its handling of HBOS
amounted to a “cop out”.

“More than halfway through the relevant period
for which the company is being sanctioned … we are finding things like 'required
actions have been satisfied, issue closed’. And then … these really swingeing
criticisms are made, dating from Jan 1 2006, and yet halfway through that
period you were not making criticisms of anything like that strength. Well I
think that is an absolute cop out — if something goes wrong you just wash your
hands of it,” said Lord Turnbull.

Mr Strachan, in a line worthy of Pontius Pilate said the FSA had “always been clear” that it was the “primary
responsibility of managers to run their businesses responsibly”.

However, Lord Turnbull hit out at what he said
were the “weakness of these systems” at the FSA, saying “does it make sense to
lend this amount of money to this small number of individuals … you would have
smelt a rat”.

Well,
thank you Lord Turnbull for having the courage to step out from behind the arras
and stick the knife where it belongs, which is firmly into the bloated egos of
these useless, do-nothing, clowns!

It
doesn't make a lot of difference because these two members of the protected
species of the Great and Good, who have enjoyed a gilded career, are still being
rewarded for their failures to oversee HBOS efficiently.

Clive Briault, a former Bank of England staffer, who then went
on to cover himself with poo in another major banking failure, was responsible
for overseeing supervision of Northern Rock while at the Financial Services
Authority. He left the FSA by "mutual agreement" in April 2008.

No other senior figure at the tri-partite authorities of the
Treasury, Bank of England and the FSA lost their job over the regulators'
failure to anticipate the bank's problems or for their handling of the crisis.

His departure came just before the regulator published its
internal report into what went wrong at Northern Rock.

The report would prove to be critical of the
supervision operations under Mr Briault. Mr Briault proved to be eligible for
£285,000 compensation, or one year's salary. Later it was reported that he received £528,952 in compensation for loss of office after he
stepped down. It was later reported that he would receive a £380,000 payout. But the FSA’s Annual Report shows
that figure to be much higher. Included in his total salary, Briault received a performance related bonus of
£30,000.It was even later reported that he was rewarded
with a £612,000 farewell package (and a pension pot worth more than £870,000).

FSA chief executive, Hector Sans, (he of the 'be very afraid'
quotation) said: "Clive Briault was leaving the FSA by mutual agreement.
Clive has been an outstanding colleague who has contributed much to the
organisation in his time at the FSA and before that with the Bank of
England."

The Treasury
Select Committee of the House of Commons said that the monitoring unit Briault
headed was guilty of a “systematic failure of duty” in its supervision of
Northern Rock claiming that it should have spotted the bank’s risky business
plan before it ran into trouble.

It sounds like
the Parliamentary Commission on Banking Standards has reiterated its
own criticism of Clive Briault along the lines of similar criticism he received
over Northern Rock.

Since then,
Clive Briault has been employed by the Malta Financial Services Authority as a consultant at a reported figure of €1,000 an hour. So far it is
reported he has been paid more than €361,297.

His latest
LinkedIn profile shows he is employed in a part-time advisory capacity with
KPMG. Isn't it funny how the BIg 4 consultancies are always willing to reward
failure if you come from the right side of the tracks, and you are part of the
culture of 'one of us'!

David Strachan, yet another Bank of
England alumni, enjoyed the usual rise up the career ladder in the FSA.He
Joined the FSA after working for the Bank of
England from 1986-98: While with the Bank
of England he
undertook banking supervision and market operations, and later as head of market conduct/infrastructure, market and exchanges
division.

In April 2011, Deloitte announced that David Strachan, was to
join the firm as co-head of the Deloitte Centre for Regulatory Strategy.

The Deloitte Centre for Regulatory Strategy
comprises experts from across Deloitte’s European network. The Centre analyses
the implications of regulation for the strategic direction and business models
of financial services firms and helps clients develop the most effective
approaches to meeting these challenges.

Hmmmmm! Pity HBOS or Northern Rock didn't get the benefit of
such a study!

So there you go! It doesn't matter how incompetent you are, you
can always rely on the Big 4 consultancies to offer a helping hand to the
chaps!

It takes a man like Lord Turnbull to point out that these two
clowns were just engaging in a major 'cop out'!

Thursday, November 22, 2012

On
19th November, Lord Myners, a Labour Peer who had previously tabled a Parliamentary
Question,(PQ), received his answer from
Lord Sassoon, Commercial Secretary for H.M.Treasury.

Lord
Myners had enquired if "...Her Majesty's Governmentcould be asked whether the Financial Services Authority is
examining money laundering by HSBC in Mexico..."

His
answer, to be found in Hansard source (Citation: HL Deb, 19th November 2012, c303w was given by Lord Sassoon, who replied;

"...The
Financial Services Authority is the regulator for financial institutions in the
UK. HSBC's operations in Mexico are not incorporated or authorised in the UK
and are, therefore, not under the FSA's supervisory jurisdiction. However, the
FSA maintains regular dialogue with the other regulatory authorities in
relation to their investigations into the HSBC Group..."

Well,
yes and no! You see, inside this apparently benign statement hides a heap of
half-truths and lies, and which tries to do more to get the FSA out of a
difficult spot, than to tell the truth to the British public.

Back in July 2012, it was announced
that "...Mexican regulators have imposed a fine of $27.5m (£17.7m) on
banking giant HSBC for its failure to comply with money-laundering regulations.

The fine comes a week after HSBC's
chief compliance officer resigned over allegations that the bank ignored warnings
that Mexican drug money was being allowed to pass through the bank.

Mexico's National Banking and
Securities Commission (CNBV) said it had imposed the fine against HSBC due to
its "non-compliance with anti-money laundering systems and controls".

HSBC Mexico issued a statement
acknowledging that it failed to report 39 suspicious transactions and had been
late in reporting 1,729 others.

"...HSBC Mexico recognises it
failed to strictly comply with banking regulations, and with the standards that
regulators and clients expect of our institution..." it said.

A week after the fining, a United
States Senate committee found that HSBC had provided a conduit for "drug
kingpins and rogue nations".

HSBC's head of compliance, David Bagley,
resigned at the Senate committee hearing. Speaking at the US Senate Permanent Sub-committee
on Investigations, David Bagley, Head of Group
Compliance, HSBC Holdings plc, said:

"...As I have thought about the structural
transformation of the bank's compliance function, I recommended to the Group
that now is the appropriate time for me and for the bank for someone new to
serve as the head of Group Compliance. I have agreed to work with the
bank's senior management towards an orderly transition of this important role..."

There
is something about all this that doesn't make any sense!

Lord
Sassoon said in the House of Lords that "... HSBC's operations in Mexico
are not incorporated or authorised in the UK and are, therefore, not under the
FSA's supervisory jurisdiction..."

So,
why is the Group Head of Group Compliance of the Holdings Company, based in the
UK, falling on his sword. According to Lord Sassoon's statement, it was nothing
to do with him.

The
only answer must be that HSBC Mexico must still have been somehow directly tied
into HSBC UK, for David Bagley to feel it necessary to resign.

But
if it is tied into the UK, then wouldn't that give the FSA a jurisdiction?

You
might very well think so, but remember, this is the fantasy world of smoke and
mirrors which is inhabited by the New Centurions of the FSA, who have been
getting a whole load of shit recently, and who don't like the criticism. It
might be a bit unpleasant if it were to be found that they should have been
exercising a far greater degree of regulatory control over HSBC and their dodgy
overseas holdings, because some irritating member of the House of Lords might
ask what the fuck they were doing while HSBC was laundering money for the
Mexican cartels?

No,
far better to get some tame civil servant to cobble together the usual weasel
worded answer to a (PQ), seeking to obfuscate and avoid telling the truth.

Hence
we got the answer as reported.

However,
what the answer failed to identify and report was the small fact that HSBC
Mexico, while it may not be incorporated in the UK, is a wholly-owned
subsidiary of a UK registered HSBC entity.

Whoops,
neat little trick that, set up some dodgy little Mexican operation, but then
tie it back into Head Office through a series of reversed inter-related company
holdings.

HSBC Latin America Holdings (UK) Ltd has its address at 8 Canada Square, London, E14 5HQ, and on 5th April 2012, a gentleman called Sandy Flockhart
retired as an
Executive Director of HSBC Holdings plc, with effect from 30 April 2012, after
a career spanning 37 years. He will be retained on the Board as a non-executive Director in
order for the Board to retain access to his extensive international experience.
Sandy will also retain his positions as Chairman of HSBC Bank plc, the Group's
principal UK and European subsidiary, as Chairman of HSBC Latin America
Holdings (UK) Limited and as a Director of HSBC Bank Middle East Ltd.

Now,
call me old fashioned, but a UK registered company that has as its Chief
Executive a man who is still chairman of HSBC Bank plc, and which has its
address in Canada Square, and which owns a Mexican bank 99.99%, might just
possibly be thought to be subject to FSA oversight, and moral suasion!

In
any event, any British bank or British-owned bank which operates abroad, is
subject, regulatorily, to both UK regulatory oversight as well as local supervision.

However,
none of this is superceded by the fact that UK law on money laundering
possesses a major extraterritorial implication. It is defined under Section 340,
sub section11 of Part 7 of the Proceeds of Crime Act 2002 as follows;

(11)Money
laundering is an act which—

(a)constitutes an offence under section 327,
328 or 329,

(b)constitutes an attempt, conspiracy or
incitement to commit an offence specified in paragraph (a),

(c)constitutes aiding, abetting, counselling or
procuring the commission of an offence specified in paragraph (a), or

(d)would constitute an offence specified in
paragraph (a), (b) or (c) if done in the United Kingdom.

Sub
paragraph (d) means that it does not matter where in the world a predicate
offence including money laundering took place, if it passes through a UK bank or
institution anywhere in the world, it will be treated for prosecution purposes
as if it had taken place in the United Kingdom.

So
where HSBC Mexico laundered money in Mexico, it still gives the UK Government a
jurisdiction in the UK to deal with HSBC for the actions of its wholly-owned subsidiary.
In any event, it must be certain that much of that dirty money passed through HSBC Latin America Holdings
(UK) Ltd, its parent company, as part of its laundering process.

This
is such a simple concept, it is hard to understand why it is denied, and it is
clear that the FSA does have as much jurisdiction as it wants to exercise, if
it wanted to accept the responsibility. However, the FSA is in a state of
serial denial when it comes to the question of their exercising their powers to
prosecute for breaches of the Money Laundering Regulations or for money
laundering per se.

This
it is why it is that Lord Sassoon stands up in the House of Lords and utters
these ridiculous and misleading words which I hope will come back to haunt him
in the future.

It
is bullshit such as this that means that the ordinary people of Britain are
being misled about the true state of serious criminality being committed by our
banks.

HSBC's
actions in Mexico were deliberate criminal money laundering. HSBC freely and
dishonestly entered into a criminal consipracy to move vast sums of drug money
for Mexican king-pins. They did this because they knew that on a balance of
probabilities, they would probably get away with it, and they took the chance
that they wouldn't get caught.

They
were caught and fined by the Mexican authorities. That does not and should not
mean that they are not subject to UK supervisory oversight, and that they
should not be forced to come to judgement in this country and take the
consequences of their actions.

To
seek to explain away the unwillingness and the inability of a regulator which
has no moral courage for this fight, despite all the evidence to support their
ability to take action, by saying that because the front organisation was not a
UK registered institution, despite the fact that it was wholly-owned by a UK
institution, is to plumb the depths of perfidy.

It
is lies like these which must make the state of British Banking organised
criminality an electoral issue, so that the British tax payers may know exactly
how much banking crime is being covered up in their name!

Friday, November 16, 2012

Whenever I get
really depressed about the financial sector, like when I read that despite all
the recent reports about city fraud, theft and money laundering, that there is still
more coming out of the woodwork; or when I read bullshit like the recent call in a letter from Andrew Bailey, head of
the Financial Services Authority’s prudential business unit, where the
regulator warns British and foreign banks that it expects to see widespread
bonus restraint ('cos that's really going to have an impact isn't it?), I play
a track from my favourite band, '...Show of Hands...'

That song, 'Arrogance, Ignorance and Greed', always manages
to reignite my sense of white-hot anger and my burning revulsion for the vast
majority of the UK financial sector, and re-confirms what I have known since I
was a Fraud Squad Detective at New Scotland Yard back in the 1970's and '80's,
that the City of London and a very large percentage of those who work there, are
nothing more than a bunch of organised criminals, who exploit the financial
situation for their own dishonest enrichment, and who don't give a flying fuck
for the investing public, the economy or the country.

So I put on this
wonderful song, and just let the music lift my soul to new heights, until I am
ready to go back into battle, against the crooks, the spineless regulators, the
complacent Government Ministers, the Big 4 consultants, the law firms, the recruitment
agencies, the PR men, the spin doctors and all the other hangers on, the loblolly
men, lickspittles, toadies and poltroons who immerse their snouts in the trough
of the City, and get fat on the proceeds of this criminal mafia and its fellow travelers.

One day, when I was
feeling particularly down, I heard this song on the radio. I loved it
instantly, and went out and bought the CD and played it again and again for
hours. At each rendition, I saw more clearly just how the country had been
served so ill by the banks and their advisers, and how their arrogance,
ignorance and greed had brought our country to the brink of financial Armageddon.

I reeled from their
insensitivity, their demands for bigger and bigger bonuses, even though they
had been bailed out by tax-payer's money and they owed their jobs to the men
and women of this country who pay taxes, unlike many of these bankers who
parked their money offshore, as we have so recently discovered, in HSBC in
Jersey.

I laughed out loud
at the fantastic demands made by banking CEOs to be allowed to continue paying
these ludicrous salaries that bore no resemblance to reality, on the grounds
that they had to pay these sums to recruit and maintain the best brains in the
market. They failed to see the irony in this statement and did not reflect that
it was these very brains that had propelled them to the brink of disaster, from
which there was no way back.

I have watched, with
a growing sense of nausea while Government Ministers have indulged in a welter
of so-called 'quantitative easing' designed to help provide liquidity to help
the markets find growth, when in reality, the banks have quietly kept the money
on their balance sheets and are even now refusing to lend it to business.

So, last night, I
went to a local theatre to watch Steve Knightley, Phil Beer and Miranda Sykes
sing and play. And, there, half way through the evening, the angry, chopping,
opening chords of this seminal song rang out, and the three of them launched
into one of the angriest renditions I have heard them sing. It was magnificent,
it was very moving, and I felt the unreasoning anger stir again in my emotions,
raising my ire to white-hot heat yet again. It never fails, and I hope it never
will.

One of my happiest
recollections is when the band played the song on the Andrew Marr show, and the
leading guest was William Hague, then UK Foreign Secretary. Hague sat through
this anthem to City fraud, theft and crime with a strange fixed grimace on his
face. It was clear that he would have rather been anywhere, and when Steve said
loudly to the band, "...It's just as well we're all in this together...' I
thought Hague was going to have a fit.

After the song, the
band was introduced to Hague and his entourage of civil servants and minders,
and at one point, as Steve Knightley reports, he asked one of Hague's senior
advisers if the band could give Hague a full set of their CD's as a memento of
the event.

The adviser
responded very brusquely, '...No, you can't..!'

As Steve said at one
gig where I saw them play;

'...Some of these highly
educated blokes have got really funny ways of pronouncing their words..."!

Anyway, whatever the
man may have meant, here are the words of the song, in full. Read them, if this
is the first time you have heard of this wonderful ballad, and then go and find
it on You Tube, and listen to it in full. Turn up the sound, sit back and feel
yourself get re-radicalised, stirring up your emotions and making you ready to
get stuck back in to carry on bashing these arrogant, ignorant, greedy
bastards!

All I wanted was a
home
And a roof over our heads;
Somewhere we could call our own
Feel safer in our beds.

There was a storm of money raining down,
It only touched the ground
With a loan I took I can't repay
And the crock of gold you found

Chorus:
At every trough you stopped to feed
With your Arrogance, your Ignorance and Greed.
I never was a cautious man,
I spend more than I'm paid.
But those with something put aside
Are the ones that you betrayed.
With your bonuses and expenses
You shoveled down your throat,
Now you bled the hand that fed you
Dear God I hope you choke!

Chorus:
At every trough you stopped to feed
With your Arrogance, your Ignorance and Greed.
You're on your yacht, we're on our knees,
Through your Arrogance, your Ignorance and Greed.
Toxic springs you tapped and sold,
You poisoned every watering hole,
Your probity,
you exchanged for Gold
The working man stands in line,
The market sets his price,
No feather bed, no golden egg,
No one pays him twice.
So where’s your thrift? And your caution?
Your honest sound advice?
You know you've dealt yourself a winning hand
And loaded at every dice.

Chorus:

At every trough you stopped to feed
With your Arrogance, your Ignorance and Greed.

Thursday, November 15, 2012

This article is adapted from a piece written by Lee
Boyce for the Daily Mail and published on 15 November 2012. I am re-blogging it because this article needs
to be read by anyone who wants to understand how financial product fraud is
perpetrated in High Street financial institutions. It is a scandalous article
and I have included it on this blog because it is an important and vital piece
of investigative journalism and because I believe it gives the lie to the
constantly parroted assertions by the banks that they adopt fair and legal
selling methods. It also helps to explain why the banks have been forced to set
aside £15 billion to recompense customers who have been sold products in a
criminally fraudulent fashion.

Today, the spotlight falls on banking giant Santander. 'This is
Money' has seen the targets staff are expected to achieve. Two whistleblowers have revealed to
them how demoralising it is currently working in the branches and how the
financially naive are seen as 'easy targets'

The first whistleblower has lifted the lid on the
pressurised branch she works in - and claims that customer service comes second
to sales targets. Santander pressures its staff to sell products that might not
be the right fit for their customers, two whistle-blowing members of staff
claim. 'This is Money' has revealed the incentivised targets Santander staff
are expected to achieve in order to meet targets, earn bonuses and rewards, and
ultimately keep their jobs.

One branch staff member – also known as a personal
banking adviser – claims to be one of the bank’s top performers countrywide,
working for a branch in the South.

She said: ‘While my performance is great my conscience
is suffering. I would love to see a change in banking, the focus is on anything
but customer service and I am in a daily battle to help my customers properly.’

She reveals that there is an overall branch leaderboard
- and also a personal banking adviser and cashier leaderboard. The latter is
based on referrals to advisers, with cashiers encouraged to push customers
carrying out simple tasks into seeing one.

She also claims that in most branches, cashiers with no
sales training or authorisation give out ‘manual applications’ for credit cards
and bank accounts for people to sign without explaining the product properly
and the implications on their credit scores.

The whistleblower claims there are 'green ticks' next
to customers’ names, which cashiers see when they are paying in a cheque or
servicing their account and these green ticks mean the customer is guaranteed
to qualify for a product, such as a credit card.

These are ‘often little old ladies with a squeaky clean
credit record’ she says and cashiers are known to ask them to sign a manual
application form without the customer even knowing what it is for – all to meet
targets.

She says that staff training received at the training
academy goes out of the window when staff go back in branch and begin selling
for real. One of the first things her manager said on her return from the
academy, she claims, was: 'You've learnt how you should do it, now learn how to
really do it.'

In other words, sell, sell, sell.

Staff gain points for most products they sell. For
example, a bank account is currently worth 65 points - but if it’s a switching
account from another bank then it can be worth up to 130.

Currently, the whistleblower needs to sell the
equivalent of two bank accounts and two credit cards a day at least, plus about
£20,000 of loans per week.

She says even though this may not sound like much on
paper, it is difficult and competitive in the branch, with new business hard to
find. Staff compete against each other on a leaderboard which is published
every Tuesday. ‘Competition is ruthless,’ she says.

For every point above the 100 per cent score they are
expected to achieve on this, staff are given a cash reward, but this is
only paid if the whole branch reaches 100 per cent of its target

'Old, young and financially naive customers are all
easy targets'.

Some of the best personal banking advisers have been
around years and know how to work the systems inside out, the whistleblower
claims.

‘Customers are promised the earth in terms of service
but many are dropped like hot potatoes after they've signed on the line. Also
Santander have a habit of moving advisers with high key performance indicators
around so angry customers cannot easily track them down and hold them
personally responsible.’

‘I've seen key facts about products (such as fees or
interest rates) left out of all conversations.

‘Advisers are supposed to have an hour with each
customer to go through the key facts leaflets, terms of business leaflets,
rates and fees literature and terms and conditions but most people are whisked
away out of queues, or jumped on from the counter, and quickly asked to sign
without actually hearing all of the key bits of information the Financial
Services Authority (FSA) tell us to tell customers.

‘The old, the young and financially naive, and also the
disabled or mentally challenged customers are all easy targets. Some advisers
see these as easy pickings as they can open duplicate bank accounts, cards and
even loans to these people to score points when in actual fact these people are
being mis-sold and have no idea what they are signing for.’

Top performers have won tickets to sporting events and
iPods.

For the new 123 bank account and credit card there is a
separate campaign running until the end of the year, the whistleblower says. The 123 account was launched with much fanfare earlier
in the year and gives customers the chance to gain cashback on a variety of
household bills and petrol costs, while also offering interest on positive
balances over £1,000.

She says there are monthly prizes up for grabs for
those who have sold the most 123 products, including supercheques (up to £500
per quarter) iPods, gift vouchers and Ray Ban sunglasses. On top of this, top
performers are given days out to the British Grand Prix, Wimbledon and
Olympics, she claims.

Management turn a blind eye to the complaints against
top performers as they make them so much money, she says.

She adds: ‘It is disgusting how we are forced to sell
to everyone who walks in the door. You are made to justify why you didn't sell
a credit card to old Mrs Holmes whose husband has just died or why you didn't
just open a new bank account for Mr Smith instead of upgrading his account like
he asked for (worth no points).’

I just want to make customers happy and do a good job!

The whistleblower added: ‘I love my job because I love
working with the public and I enjoy working in a bank, but I long to do things
the right way and be rewarded for doing so.

‘I have so many happy customers but am constantly
picking up the pieces of colleagues who do things the wrong way.

‘I make sure I never sell to anyone without telling
them everything, even if it means getting in trouble with management for taking
too long.

The second whistleblower says that excellent customer
service is 'no longer paramount'

He says that when a customer comes to deposit money, he
is under pressure to find at least one product which he can try to sell them,
even if they can find a better alternative elsewhere.

The whistleblower says: ‘If I am not seen doing this
with every single customer, a member of management will have a stern word with
me.’

His branch also has a league table which is updated
every week to show how staff are performing.

He says they are given an individual bonus if they hit 90 per cent of their
referral targets and 90 per cent of sales targets. If they reach 100 per
cent of their targets they will receive an additional bonus, and also a further
bonus for every sale over 100 per cent up to a maximum of 200 per cent.

The whistleblower says: ‘I have been threatened with
the sack because my sales were not deemed high enough.

‘I’m sure you are well aware that some Santander
branches are being shut down and that the staff from these branches need to be
relocated.

‘This has allowed managers to make threats such as
“Santander will be making cuts and the first to go will be advisers who are
performing poorly in their sales.”’

It is sales that we are targeted on. We cannot tell
customers that there are better savings rates available on-line, nor can we
offer the alternative of opening accounts on-line as this means one less sale
in branch.’

The whistleblower also says that advisers do not wish
to speak to customers unless they are bringing in new money, for example moving
money from Barclays, or the money is from a different Santander branch.

A customer may have £50,000 in a savings account paying
0.1 per cent, he says, but if the money is already registered under this
branch's name, no adviser will see them.

It is to be hoped that the FSA's Intelligence
Department will have picked up on this excellent piece of reporting and will be even now
making decisions on how Santander management can be keel-hauled for encouraging
and inciting this kind of criminal behaviour. I have previously discussed
Sections 2 and 3 of the Fraud Act 2006 in this column and it is clear to see that
the same breaches of the law, this country's primary anti-fraud legislation,
are being perpetrated every day against the financially unwary. The FSA cannot
and must not be allowed to claim that they were unaware of these practices and
must take action to deter this wrong-doing!

Tuesday, November 13, 2012

Here's
to all you Bloggers, Tweeters and Face-Bookers out there. We have been posting
our messages that have been telling the City and its organised criminal mafia
gangs that we know all about their vicious games and we have put them on notice
that we are not going to give up all the while their supine regulators stay
asleep on the job, and continue to allow them to get on with their stealing,
cheating and lying!

We
have also sent strong messages to the Fantastically Supine Apologists that they
are not doing their job properly, and we have demanded that they raise their
game and start earning their copper-bottomed salaries.

We
must have been doing something very right because the call has gone out from
the Square Mile that they desperately need help to keep the banker bashers off
their case, and just in the nick of time, their friends who sup at their table,
immerse their snouts in their trough, or who, like the financial 'tick-birds'
they are, and who live a parasitical existence on the backs of the Banks and
the Hedge Funds, the Fund Managers and the Pension Fund providers, and all the
other bottom-feeders who inhabit the City, have started to come to their aid and
assistance.

The
City's wagons are circling and now the Square Mile's apologists are coming out
of the backwoods to lend their support.

This
is nothing new, in my first book 'Fraud In The City - Too Good To Be True,
published in 1986, I referred to that '...group of fellow-travelers to whom
the City could always turn for help and support and who could be relied upon to
call for a cessation of anti-City rhetoric, for fear that it would otherwise
result in damage to the City of London and its ability to earn money from
abroad...'

These
people were as predictable as a Swiss watch and they would begin by claiming
that such bad publicity was causing Britain to lose its pre-eminence in World
markets; that if we were not careful we would be overtaken by America or the
Far East (or, God help us, Germany); they would claim that whatever scandals
had happened, the market was bigger than the bad news, and that lessons had
been learned, reforms introduced, lines drawn in the sand and it was time to
move on, pull together, and generally do the right thing by the 'chaps' who
knew what was good for Britain.

The
Sunday Times pulled its wagon into the ring when it published a serious piece
of City apologia on 11th November reporting that '...London has lost its top spot as the world’s biggest financial centre by
jobs and will drop into third place by 2015. The City was narrowly ahead
of New York and Hong Kong on people employed last year, but will fall behind
the American financial centre this year. It will be overtaken by Hong Kong
within three years, with Singapore not far behind, according to the latest
forecasts from the Centre for Economics and Business Research (CEBR). The
consultancy said London was losing its dominance because of a “shift to the
east”, but it blamed “short-sighted over-regulation, penal taxation and banker
bashing” for accelerating the trend.

There you have this sort of crap in a nutshell. I mean you
couldn't make it up it is so predictable! And the causes, oh yes, you guessed;
'...over-regulation, taxation and banker-bashing...' I don't know who the CEBR
are, but couldn't these well-heeled guys have at least come up with something a
bit more fucking original?

Then, only yesterday, a true heavyweight in the shape of the
Confederation of British Industry pulled its wagon alongside, when John
Cridland, a man with a vast experience of really working in proper jobs was
forced to opine in the Times that a line needs to be drawn under the PPI scandal. He wants to see a statute of
limitations, to be backed by the Financial Services Authority (FSA), to cap the
time during which legal claims can be initiated.

Cridland has another bank-related worry. "Am I alone in my
concern about the recent high court ruling on the Guardian Care Homes
case?" he asks.

The reference is to a care homes company that says it was
wrongly mis-sold interest-rate swaps by Barclays. The ruling in question merely
allows the case to be heard, Lord Justice Flaux having decided that Barclays'
attempts to dismiss the Libor-rigging aspects were "wholly without
merit".

Cridland thinks that "government needs to be prepared to
step in to head off judge-led law if necessary", on the grounds that it
would be "a dangerous precedent" if banks were held responsible for
products sold that related to Libor.

This is really serious stuff, and is an attempt to get the
government to interfere with the ordinary course of the law and litigation
arising from criminal banking activities, but it demonstrates how far the
City's friends are prepared to go to protect their pals from censure. No doubt
the banks feel they have a right to expect the CBI to stand up for them,
considering how much they pay to belong to the CBI. Companies pay
subscriptions to the CBI based on their number of employees. Arguably, that
gives the banks – still very big employers – a very loud voice within the
organisation, and when the banks are paying and they say 'jump', they like
their paid lackeys to respond quickly!

And,
guess what, the City's apologists can now include the Prime MInister, David
Cameron among their supporters. Mr Cameron, who seems to have
conveniently forgotten his calls for major investigations into City wrongdoing,
and who is now a leading apologist and gung-ho, good-chaps syndrome, sort of
fellow, gave a warning on Monday night that
critics of the nation's banks "end up trashing Britain" as he mounted
a strong defence of the financial services industry.

Speaking
in the most opulent dining room of the Square Mile in his annual Guildhall
speech, the prime minister took a swipe at the likes of the Liberal Democrat
peer Lord Oakeshott, who regularly lambasts Britain's banks.

Cameron
acknowledged that "terrible mistakes" had been made in the City, but
he pointed out that financial services contributed an eighth of all government
revenue during the recession.

"...Yes,
some utterly terrible mistakes were made and they need to be addressed properly
so they can never happen again..," he told his City audience of bankers,
brokers, insurers, funny handshake makers, and people who get a thrill out of
dressing up in ritual medieval costumes. "...But those who think the answer
is just to trash the banks would end up trashing Britain. I say recognise the
enormous strength and potential of our financial sector, regulate it
properly and get behind it..."

Well,
you see Prime Minister, before we can give you the comfort of that support, the
thing is that we would just like you to address the issues which have led to
£18 billion worth of PPI financial crime in this country, before we start
getting all rosy-cheeked about the financial sector. If you think that these
can be wiped away by the phrase 'terrible mistakes', then you are proving that
you haven't got a fucking clue about what's going on and you are falling for
the same soft soap that all the rest of the apologists are sliding around
on.

We
would also like you to address the unquantifiable amount of fraud perpetrated
in the LIBOR manipulation cases, but if you think that the Wheatley proposals
are going to be a way of addressing the criminal actions properly, and
regulating the market properly, then you need to think again. You can't wash
this whole panoply of crime and sleaze away in between slurping down the soup
and fish, and if you think that by just calling for a cessation of trashing
bankers, that's going to prove your strength of leadership, you need to think
again mate!

Unless
you take these crimes seriously and make sure that the most egregious persons
involved in them get prosecuted, then they will happen again, and again and
anyone getting behind the financial sector in its present guise, is just going
to get sprayed in more shit!

I
heard this call so many times during the age of scandals in the 1970s and the
1980's and now we are hearing it again, and the message is still the same old,
same old! The only difference then was that we did at least manage to prosecute
a few fat cats, unlike to day where very few people get prosecuted for any kind
of crime in the financial sector at all. And all the time they keep refusing to
prosecute financial criminals the less they will be trusted

Only yesterday, the FSA announced that they
had issued a censure against Reverend
Carmel Jones, the head of the Pentecostal Credit Union, who was found to have
fallen short of standards required by the Financial Services Authority
in channeling money purportedly lent to the credit union’s members to
churches.

Tracey McDermott, FSA
director of enforcement and financial crime, said: “This is a disgraceful case
of a credit union putting the interests of another organisation before those of
its members. The FSA will not tolerate this conduct in the industry.

The Rev Jones should have
been prosecuted for theft of the monies, albeit he did not benefit from the
action himself, he nevertheless ignored previous warnings not to behave in this
way and has caused significant loss to the Credit Union. How does an
outcome like this send any messages to other potential wrong-doers?

Now we are looking at a
suggestion that dishonest practitioners have been manipulating gas charges and
cost rates, and the FSA has promised to investigate. I don't think anyone
should be holding their breath!

So, my message to you
Bloggers, Tweeters and Face-Bookers is keep on keeping on! Don't give up
because you think that your messages are not being heard. Together, we are far
more than the sum of our parts, and there are some very brave men and women out
there who have been cruelly traduced by the banking bastards, and who have been
let down by all the systems and controls allegedly put in place to help
ordinary people who find themselves in conflict with the financial sector, and
who only have the Internet to get their voices heard.

These people like Ashley
Smith, who never gives up and is a constant tower of strength, Caroline Barwick
who has fought like two people, Ian Fraser, who is an inspiration to us all, Philip
Duval who is the modern boy who pointed out that the Emperor wore no clothes,
Chris Cook who really gets this derivative stuff, and understands how the
energy crooks work; Golem XIV who hits hard, really hard, and my friend Carol
Harries who is an indefatigable letter writer and who manages to get her
correspondence into offices and onto desks of those who would rather she didn't
know their address, I salute you all, you are what makes it all worth while!

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!